the power of co-operation

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Conflict has been a feature of Britain’s largest consumer co-operative, The Co-operative Group, over the last eighteen months, as it has tried to turn round the business and build consensus on a new way of working.

We see conflict in all organisations, large and small. It happens for the same kinds of reasons – people have different views about what to do or how to do it, they are subject to different pressures, they suffer emotions such as jealousy, fear and anger and they compete to get their ideas accepted by those around them.

There are always reasons for conflict, sometimes good reasons. It is how you handle conflict that matters. In a co-operative, the organisation is ultimately a tool for people to come together, so sustaining mutual and respectful relationships is typically the place to start.

The Co-operative Group has been through tough times before in its long history and has typically emerged stronger and more agile as a result, but the key test is always whether challenge brings people together or pulls them apart.

Some years ago, working with a range of organisations focused on the food sector, including the Plunkett Foundation, Country Markets, FARMA, Sustain and the Soil Association, we developed a series of resources, authored by the respected co-operative developer Kate Whittle, on the theme of ‘from conflict to co-operation’. They have been in good use ever since.

Included are a series of cartoons that should perhaps be required reading for all those with strong views on the future of The Co-operative Group.

Drawn by Angela Martin, here is a selection of my favourites here below.

Monetary reform is a vital but complex cause, one whose advocates, however brilliant, tend to obscurity and which covers a range of sometimes competing proposals, including: reform of seigniorage, which is the issuing of money; the role of interest; the case for linking money systems with energy and resources; complementary currencies, digital currencies and co-operative systems of exchange, such as the Swiss WIR. One slide show which offers a quick tour of this is by Pat Conaty, Co-operatives UK Associate, up here.

Re-reading my foreword, I think it remains a reasonable introduction to the case for some such monetary reform.

“For all the prominence and sophistication of share dealing and financial services in the new economy, it is rare that we ask questions of our money system itself. The way that we issue and use money seems so ingrained that it’s hard to question. It is, in the words of George Orwell “the air we breathe”. Like air, it’s everywhere, we are dependent on it, and perhaps most important, until it is really dirty, it cannot be seen. We see the money system as something natural. But it’s not.

The rules of the money system have shifted. The majority of money that now changes hands does so electronically. As a result, far more than ever before, new money is not issued by the state but by banks. Ninety seven pounds in every one hundred circulating in the economy will now have been issued by banks (in the form of sight deposits, printed into customers’ accounts as interest-bearing debts). Only three pounds are cash, issued by the state (in the form of banknotes and coins, issued at no interest). The cost to the state of issuing new money is only the cost of producing banknotes and coins. The cost to the banks of issuing new money is virtually zero. The state receives public revenues from issuing cash, but banks make private profits. The benefits of the money system are therefore being captured by the financial services industry rather than shared democratically.

The loss of this privilege is equivalent to an extraordinary twelve pence on income tax in the UK. In effect it has become a subsidy to the private banking sector – a nice little earner, but one that should always have been for public benefit rather than private gain. This is likely to grow as as we move further still towards a cash-free economy, perhaps to a point where coins and notes represent less than 1% of money in circulation. Unless we find creative alternatives, the benefit of issuing new money will have transferred entirely from public benefit into private corporate gain.

This report offers a practical and clear step-by-step agenda on the essential first step of restoring the right of issuing new money in a modern economy to be of benefit for the common good. In the terms of the new thinking that is emerging about the creation of sustainable and inclusive economies, this is an achievement that ranks high. It fits directly into a new theoretical model, combining socio- and ecological economics, in which market actors are located within common property resources rather than allowed to free-ride on the back of them. In short, the market meets the commons; and new economics, whether through eco-taxes or monetary reform, concerns the achievement of a fairer and more sustainable balance of cost, risk and return between the two.This report addresses the issues and the complexities of how new money can be created. I encourage you to engage with it in full, because the analysis and prescriptions are landmark achievements and I am proud to be associated with it.

There is no better time for an idea such as monetary reform to flourish. The democratic state is being eroded in the face of global markets. In many parts of the world, concerns about market failure now have to be put alongside concerns about state failure. Issuing new money in the form of public expenditure enables the public purse to go further – whether for public transport, environment or regeneration. Restoring democratic control over how new money is issued is an important step towards a global economy in which unpayable debts are reduced and resources can be freed up for sustainable development.”

With Iceland looking at options for change, monetary reform at last is coming in from the cold.

The ‘keep it coop’ campaign of the Co-operative Party has been high profile and energetic – and a testament to the skills of the small staff team and the politicians involved in the party.

The campaign goes wider than simply trying to keep the funding for the Co-operative Party, which has long been aligned to Labour. But it is worth remembering that, despite one hundred years of action by the Co-operative Party, the original co-operative vision was not one that started from political alignment, but rather one of transformation from below.

These are four main dates that shape the formation of the co-operative principles around political activity:

1832: Twelve years before the formation of the first modern consumer co-operative in Rochdale, the 1832 Co-operative Congress, chaired by none other than Robert Owen, passed the following resolution: “Whereas, the Co-operative World contains persons of all religious sects and of all political parties, it is unanimously resolved – that Co-operators, as such, are not identified with any religious, irreligious, or political tenets whatever; neither those of Mr Owen, nor of any other individual”

1860: The Rochdale Pioneers declared in their Almanac: “the present co-operative movement does not intend to meddle with various religious or political differences which now exist in society, but by a common bond, namely that of self interest, to join together the means, the energies, and the talents of all for the common benefit of each”

1937: After long consideration, the International Co-operative Alliance published its first set of global principles, including the recognition of political and religious neutrality.

1963: The first revision of the principles was set in train. The agreement in 1966 included removing reference in the principles to neutrality and to cash trade. The rationale was, on one account, to replace political and religious ‘neutrality’ with political and religious ‘independence’, which is covered in a principle on autonomy. In 1992, a report for the International Co-operative Alliance explained that “this implies that co-operatives should carry out their own opinions without undue dependence on other organisations or on political parties”

The Co-operative Party has a proud heritage and long list of achievements, which are set out in this elegant summary by the Co-operative Heritage Trust. It’s current manifesto offers a wealth of creative policy thinking. But there is, also, a different, and longer, tradition of political neutrality in the co-operative sector, both here and abroad.

Some co-ops elsewhere have supported political representation, such as the effort by the Seikatsu Club in Japan to boost women’s representation in the 1990s, by putting up candidates under the banner of ‘politics from the kitchen’, but these examples tend to be the exception rather than the norm. Co-ops are often engaged in campaigns that might be seen as political, but it is rare that they seek direct representation in the way that has been the case here. Having said this, the autonomy and independence of co-ops from wider political sway has always been seen as essential.

There are two honourable traditions in the co-operative sector. Both share a common set of values, for example co-ops should act in an open way, but beyond these, you can choose to be politically aligned or choose not to be. Get it right, and either way can help to keep it all coop.

My friend and former colleague, Prashant Vaze, is in Hong Kong and sends me an update on food and produce that he finds there. It is the take of a veteran environmental economist, never off guard.

” The Cantonese are major foodies. I mean this in the sense they really care about the food they eat. They scour the globe for the choicest foods:live crabs from Cornwall, rock lobsters from New Zealand, sea cucumbers and abalone (sea snails) from South Africa and the infamous shark fins from whoever will sell them.

Frozen seafood retails at a fraction of the price of fresh food so where possible these items are flown in,chilled but alive,at a carbon and financial cost and then presented in restaurants, supermarkets and wet markets. Customers either select the fish at the restaurant or bring their own. The chef despatches it, then serve it a few minutes later gutted, and stuffed with rice and spices.

It’s not just fish. The Cantonese are proud of their reputation of eating absolutely anything. My colleagues delight in taking me to restaurants and serving me some harmless looking piece of meat and proudly identifying it afterwards as chicken’s feet, pig’s cheek, or squirrel’s testicle (I didn’t in fact know squirrel’s had testicles).

But just because Hong Kong people are into their food – it doesn’t mean the food is necessarily all that good. Or even edible for that matter. At least thirty per cent of Cantonese food is off-bounds to me either because it uses gross parts of animals (feet, snouts, intestines), inedible species (crickets, sea cucumbers) or endangered species.

A friend from the environmental charity WWF told me that a street close to where I lived is one of the top spots for buying illegally traded ivory artefacts, cunningly labelled as mammoth ivory. It seems CITES, the international conservation agency, is relaxed about using species that are already extinct. Itsdisapprovalis reserved for species on the brink of extinction.

As an economist though, I do worry about the sort of behavioural signal this sends poachers.”

Applications are now open for communities in England to participate in the new partnership programme on community economic development. In my last post, I listed five exemplars from the UK. I have been pointed to many others pretty quickly, but also asked if I can tell the story of Cleveland from the USA. So here we go…

The Evergreen Initiative in Cleveland, USA was launched in 2007 and was inspired by the successful Mondragon Co-operative Corporation in Spain that has regenerated the Basque country’s entire economy over the past 50 years by devising an ingenious co-operative economic development approach funded by a local co-operative bank within a worker owned enterprise network. The local co-operative bank began life as a credit union for worker co-ops and it has operated with a focused mission to recycle and re-circulate low-cost capital within the local economy networks established by the worker owned firms in Basque cities.

In an adapted design for Cleveland, low-cost capital has been seeded by grant capital from the Cleveland Development Foundation and supported by different forms of tax credits as well as long-term, low-interest loans from the federal government.

Evergreen Co-operatives have so far set up three expanding worker co-operatives: Evergreen Co-operative Laundry Services that has been supported by procurement from anchor institution hospitals and universities; Evergreen Energy Solutions that has been set up both for installing, owning and maintaining solar power on anchor institutional buildings and for repairing and insulating older housing stock citywide; and Green City Growers a food growing co-operative to create jobs through the largest inner city farm in the USA and green house facilities (with 3.25 acres under glass) designed to harvest three million heads of lettuce a year and grow several hundred thousand pounds of fresh basil and other herbs – on a ten acre site in a low income neighbourhood right in the heart of the city.

The strategy of Evergreen Co-operatives links up three co-operative economic development tools. Firstly the worker co-operative model to create good jobs including equity development for worker owners and profit sharing, secondly a Community Development Finance Institution owned by the Evergreen co-op network to invest and recycle low-cost capital (as subordinated debt at a rate of 1% to create jobs) and thirdly a Community Land Trust to develop the space and sites for food growing and for developing affordable housing in the second phase of their plan. They have raised already £200 million of low-cost capital for Evergreen Co-operative Development Fund, their CDFI, and the annual procurement power of their anchor institutions is $3 billion.

Cleveland shows the power of community economic development to change the future for a city. As David Boyle says in his report for us with the New Weather Institute, Ultra-Micro Economics, “small plus small plus small plus small equals big”.

The approach has stimulated similar plans to copy the ‘Cleveland model’ in other US cities including Atlanta, Pittsburgh, Milwaukee and Washington DC. Here in the UK, there has been work in Preston, as I mentioned in my last post, and there is nascent interest among co-operative councils and with co-operative development agencies, such as Hackney Co-operative Enterprise in East London, which aims to put its own housing-related services out to locally-owned enterprises, rather than source these from outside its target neighbourhood.

While the elephants of national political life trumpet and dance, there is a wonderful new programme starting at the grass-roots level, with cross-party support.

This is the first national ‘community economic development’ programme for a generation – reaching back to the pioneering work on community business of the Highlands and Islands Enterprise Board in Scotland and on local economies by the Greater London Enterprise Board.

Anyone who works on neighbourhood development knows that local economy shapes and defines what you can achieve. No jobs, you are playing catch-up. If the bank closes, businesses close as night follows day. No business, you will have no life on the streets, but the siren hoardings of payday lenders. Some of the most inspiring examples of neighbourhood renewal are those that have turned the local economy from vicious spiral to virtuous circle.

Local authorities have a key role to play, as the longstanding work of the Centre for Local Economic Strategies shows, but there is also something different about where this is true community-led regeneration. Success tends to be where you can tap into the same spirit of self-help and mutual aid that characterises the best co-operatives. Perhaps it is no surprise that over half of co-ops (56%) are to be found in the least advantaged areas of the UK, while the enabling role of community agencies, such as settlements and development trusts in the poorest neighbourhoods is well recognised. As Pat Conaty argues, in his book on community economic development, The Resilience Imperative, co-written with Canadian community economic development specialist Mike Lewis, they create a voice for local people and a stake in their success.

The new programme will help 50 communities in England to develop their own community economic development plans. Anyone can apply from April 1st – you just need to be involved in an existing organisation – whether that’s a local community group, local business, parish council or any other local body. An experienced adviser will act as the main point of contact and will guide you throughout the process of developing a well-supported, dynamic and deliverable local economic plan – with the support of a grant of £5,000 for the further development of your plan and with access to specialist support.

“The Church has always acknowledged, appreciated and encouraged the co-operative experience”, said Pope Francis a few days ago to seven thousand members of the Confederation of Italian Co-operatives.

Pope Francis referred to past teaching that chimed with co-ops, such as the encyclicals “Rerum Novarum”, with Leo XIII’s appeal for a society in which “All [are] owners, not all proletarians”. But he urged co-ops to look to the future: “It is a real mission that requires creative imagination to find forms, methods, attitudes and tools to combat the throwaway culture cultivated by the powers that support the economic and financial policies of the globalised world”.

He proposed five actions for co-operative action, to build an ‘economy of honesty’.

1. Co-operatives should “continue to be the motor for lifting up and developing the weakest part of our local communities and of civil society”. This involves “giving first place to the foundation of new co-operative enterprises, along with the further development of those already in existence, so as to create, above all, new work opportunities that currently do not exist … especially for the young, as we know that youth unemployment … destroys their hope”, but also for the “many women who need and wish to enter the world of work. We must not neglect the adults who often find themselves prematurely without work. Aside from new enterprises, let us look also to the companies in difficulty, those that the old owners leave to die, which could instead be revived through co-operative ‘workers’ buy out’ initiatives.

2. Look to become active agents of new welfare solutions, above all in the healthcare sector, “a delicate field where many poor people no longer find their needs to be adequately met”. The answer may be found in applying subsidiarity, “with strength and coherence”, creating an effective network of assistance and solidarity between co-operatives, parishes and hospitals.

3. Co-ops can be symbols of a different approach to the economy. “It is well known that a certain liberalism believes it is necessary first and foremost to produce wealth, and that it is not important how, before promoting any form of redistributive policy”, explained the Pope. “Others think that it is the same enterprise that must donate the crumbs of accumulated wealth, thus absolving it of its so-called ‘social responsibility’”. However, we know in achieving a new quality of the economy, it is possible to enable people to grow in all their potential. A member of a cooperative must not be merely … a worker … but must instead always be a protagonist, and must grow, through the co-operative, as a person, socially and professionally, in responsibility … an enterprise managed by a cooperative must grow in a truly co-operative way, involving all”.

4. Co-operation can strengthen the link between work and family – including “helping women to fully achieve their vocation and to put their talents to use” through initiatives that meet the needs of all, from nurseries to domestic care.

5. Use money wisely. Pope Francis says “you must invest, and you must invest well. In Italy certainly, but not only, it is difficult to obtain public funding to compensate for the scarcity of resources. The solution I propose to you is this: unite with determination the right means for carrying out good works. Collaborate more with cooperative banks and businesses, organise resources to allow families to live with dignity and serenity, and pay fair salaries to your workers. … Money, placed at the service of life, can be managed in the right way by the co-operative, if however it is an authentic and true co-operative, where capital does not rule over people, but people over capital”.

Co-ops must “promote an economy of honesty, a healing economy in the treacherous sea of the global economy. A real economy promoted by people who have at heart and in their minds only the common good”.

“It is necessary to have the courage and imagination to build the right road to integrate development, justice and peace throughout the world”, he concluded.

These are inspiring words, hopeful words. Pope Francis is, in the words of Dame Pauline Green of the International Co-operative Alliance who has spent time with him and talked of his upbringing in Argentina, ‘the Co-op Pope’.